From tralac’s roundtable, yesterday, on global, African, and South African trade and trade-related developments: the background paper, by Taku Fundira

CFTA negotiations update: 200 delegates discuss technical elements of the Free Trade Area Agreement (Rwanda News Agency)

The AU’s Chief Technical Advisor on the CFTA, Prudence Sebahizi: "Delegates will make recommendations to the Negotiating Forum which will hold its meeting in Addis Ababa at the end of February 2017. The Negotiating Forum is made up of one representative per African country, that is, chief negotiator and his deputy." He stressed that a total of seven working sessions, corresponding to seven areas of discussion, would be held in Kigali in two phases. The first session takes place from 6-10 February; the second session from 13-17 February. The first session comprises four areas which are: (i) Trade in services; (ii) Rules of origin; (iii) Sanitary and phytosanitary measures; (iv) Non-tariff barriers and technical barriers to trade. The second session integrates a further three areas: (i) Commercial Corrective Measures; (ii) Customs procedures and facilitation of trade exchanges; (iii) Legal and institutional affairs.

Each session in Kigali brings together 200 delegates. At the end of the first session 100 delegates will return to their respective countries, replaced by 100 others who will join the 100 or so delegates who will participate fully in both sessions. According to the Chief Technical Advisor, the texts governing the African Common Market will have to be finalized before the end of 2017, as recommended by the African Heads of State. "Our texts on the African Common Market should be ready for signature at the end of 2017. We can organize an extraordinary summit on this issue of signature to accelerate the integration of the continent," explained Sebahizi. [Translated from: Deux cents délégués africains discutent sur les éléments techniques de l’Accord sur la Zone de Libre Echange Continentale]

Tackling illicit financial flows: can Africa rise to the challenge? (UNECA)

Optimizing Domestic Revenue Mobilization and Value Addition of Africa’s Minerals (pdf): the report was prepared at the request of the AU Heads of State and Government. It examines the management of Africa’s mineral resources, with a particular focus on optimizing revenue mobilization through the harmonization of fiscal regimes, in particular royalties, across the continent. The report presents different options for harmonization and their implications for supporting domestic revenue mobilization and regional value chains. The report reviews experiences from other countries and regions, with view to identifying good practices for designing and implementing effective fiscal regimes in Africa.

International Forum for NTF Committees: two commentaries by Dr Sangeeta Mohanty (Cross Border Research Association)

Part 1: The following panel discussions centred on the role of regional organisations in Africa and Latin America and the Caribbean along with the bottlenecks affecting the implementation of TF reforms. Parallels were drawn between the African and Latin American context where regional integration is largely missing. The main challenges appear to be limited human and financial resources, different priorities among members and agencies, duplication of efforts across existing agencies, weak monitoring and evaluation process, private sector exclusion from decision-making, limited coordination of NTFCs at regional and sub-regional levels, the different mandates and goals of NTFCs, and vested interests of different parties. Panellists recommended a variety of solutions, such as empowering regional committees with the capacity to coordinate, mobilising of resources, harmonising and standardising procedures, aligning facilitation and compliance, enhancing regional competitiveness, and ensuring public-private cooperation.

Part 2: The forum concluded with an extensive discussion around the specific role of NTFCs in the evaluation and monitoring of reform processes and in shaping the future of Trade Facilitation. An overview of the WCO tools for monitoring and evaluation was given, namely the Time Release Study and the SAFE Framework of Standards – Self- Assessment Checklist. The private sector was viewed as a valuable instrument in the monitoring process. Since businesses have legitimate reasons for efficient border management, leveraging public-private dialogue in each step of the reform process was considered vital. Coordinated Border Management and Information and Communication Technologies, ICT, were considered two important pillars of Trade Facilitation reforms. Strengthening border management and ICT based modernisation of services is expected to play an increasingly significant role in global trade.

The case for a Europe-led ‘Africa Infrastructure Investment Bank’ (Beyondbrics, FT)

Europe should create a new institution, the African Infrastructure Investment Bank, that brings to Africa all the accumulated experience of the EIB and EBRD, finances projects that meet the required thresholds, and attracts the right levels of human, financial and political capital needed for this enormous challenge (working in partnership with the current African Development Bank). Additionally, a Europe-led African Infrastructure Investment Bank would create the right level of engagement between the two continents, with neither unjustified patronising nor unjustified complaining. This institution would address once and for all the (mis)perception that Europe and the US only come with check lists rather than with cheque books. [Commentary by Miguel Azevedo, Citigroup]

Günter Nooke: ‘Who does DG Trade think it is?’ (DIE)

For the 2017 summit, it would be both very noble, as well as offering a vote of confidence, if the EU Commission and the member states were to offer a moratorium on EPAs for ten plus ten years, and if we jointly promoted the larger market in Africa, funded infrastructure, created educational opportunities and provided know-how and investment guarantees as described in the EU’s External Investment Plan, i.e. if we took steps in a different direction together. To get the debate under way, allow me to end with a classic double-entendre (from football coach Giovanni Trapattoni), now related to the EPA negotiations: who does DG Trade think it is? [Note: The next EU-Africa summit is due to take place in Abidjan in November]

Ghana ends first round of oral defence in maritime border dispute with Ivory Coast (CitiFM)

Ghana’s new Attorney General, Gloria Akuffo, who led the legal team, questioned Ivory Coast’s claims, despite a long standing agreement on their maritime boundary under their domestic laws. Ivory Coast has accused Ghana of using the development of its oil industry to annex the territory which does not belong to it. However, disputing this argument, Madam Akuffo said Ghana had developed its oil industry based on pre-existing maritime boundary the two countries have mutually recognized over the years. “It is on the basis of this tacit, mutual understanding that, that over many years Ghana has developed this industry step by step, openly, from the first licensing of blocks, through decades of studies, exploratory drilling and the eventual drilling of wells” she told the Special Chamber when it resumed public hearing on Tuesday, February 6, 2017.

Indonesia, South Africa talk to boost trade (Jakarta Post)

Foreign Minister Retno LP Marsudi was in Cape Town on Monday for bilateral talks with her South African counterpart. She said an agreement was struck with South Africa’s International Relations and Cooperation Minister Maite Nkoana-Mashabane to finalize a plan of action for both countries’ 2017–2021 Strategic Partnership, which would act as the basis of future economic cooperation. Afterwards, Retno spoke to a South African-Indonesian business forum, inviting local businesses from the energy, shipping, and strategic industry sectors, as well as travel agents and importers of furniture and foodstuffs, to “trade, invest in and tour” Indonesia. Members of the Indonesian Chamber of Commerce and Industry (Kadin) and state export financier Indonesia Eximbank were also present, completing the promotion-heavy entourage. One of the results of the forum includes a plan to import 18 containers worth of consumer goods from Indonesia, as well as an assessment of plans to build an instant noodle production facility in South Africa.

Mauritius: Foreign Affairs Minister invites Indian investors to invest in Africa through Mauritius (GoM)

Minister Lutchmeenaraidoo highlighted that doing business with Africa is one of the three pillars to boost the Mauritian economy along with the blue economy and the Maritime Hub. Mauritius relies heavily on strategic partnerships to develop new activities and in this context it seeks to encourage Indian operators to take an interest in them and to explore ways of collaboration within the framework of South-South cooperation, he added. He underscored that with a new opening strategy, Mauritius can become a regional power within the next ten to fifteen years. He further explained the Mauritian approach to putting in place instruments such as special purpose vehicles to channel international capital towards development projects in Africa.

The World in 2050 (PwC)

We project that the world economy will roughly double in size by 2042, growing at an annual average rate of around 2.6% between 2016 and 2050. We expect this growth to be driven larely by emerging market and developing countries, with the E7 economies of Brazil, China, India, Indonesia, Mexico, Russia and Turkey growing at an annual average rate of almost 3.5% over the next 34 years, compared to just 1.6% for the advanced G7 nations of Canada, France, Germany, Italy, Japan, the UK and the US. We will continue to see the shift in global economic power away from established advanced economies, especially those in Europe, towards emerging economies in Asia and elsewhere. As shown in Figure 1, the E7 could comprise almost 50% of world GDP by 2050, while the G7’s share declines to only just over 20%.

Lucian Cernat, Marion Jansen: ‘Talking trade in the post-truth era: bringing the numbers that matter’ (Vox)

Today’s challenge for economists is thus to show that the effect of globalisation on the median voter is positive. One way to do this is to create a more direct link between firms, voters and trade policymakers.

US trade data signals shift from goods to services (Nikkei Asian Review)

US exports of goods fell about 3% to $1.45 trillion in 2016 on a strong dollar even while the country logged a massive surplus in services, highlighting a shift in the economy’s focus. The figure fell a second straight year, according to Department of Commerce data released Tuesday. But the total deficit in goods also decreased 1.5% to $734.3 billion, thanks mostly to lower prices for such fuels as crude oil. Even without this boost, the US trade balance improved steadily over the last decade.

US 2016 trade gap with Japan was second-largest; deficit with China is half the total (Japan Times)

The US trade deficit in goods with Japan was its second-largest in 2016, totaling $68.94 billion, according to new US government data. The trade gap with China was five times bigger, topping the list at $347.04 billion, the Commerce Department said Tuesday. That was, however, 5.5% lower than a year earlier. The deficit with Germany, the previous No. 2, shrank 13.3% to $64.87 billion as shipments to Germany surged 12.4%. The deficit with the European Union narrowed 5.9% to $146.34 billion.

USA has run annual trade deficits for 41 straight years (CNS News)

The last time the United States ran a trade surplus was 1975 - when Gerald Ford was president. The Census Bureau has published historical data on annual US trade balances going back to 1960. In 13 of the 16 years from 1960 through 1975, the US ran goods-and-services trade surpluses (pdf) and surpluses in the trade of goods (merchandise) alone (pdf). But in each of the 41 years after 1975, according to data released by the Census Bureau and the Bureau of Economic Analysis, the US has run both a merchandise trade deficit and a goods and services deficit.

The global role of the US economy: linkages, policies and spillovers (World Bank)

This paper analyzes the role of the United States in the global economy and examines the extent of global spillovers from changes in US growth, monetary and fiscal policies, and uncertainty in its financial markets and economic policies. Developments in the US economy, the world’s largest, have effects far beyond its shores. A surge in US growth could provide a significant boost to the global economy. Tightening US financial conditions - whether due to contractionary US monetary policy or other reasons - could reverberate across global financial markets, with adverse effects on some emerging market and developing economies that rely heavily on external financing. In addition, lingering uncertainty about the course of US economic policy could have an appreciably negative effect on global growth prospects. While the United States plays a critical role in the world economy, activity in the rest of the world is also important for the United States. [Services in the TPP: what would be lost?]

Peru Free Trade Agreement could help India diversify in LatAm region (Financial Express)

At present, India’s bilateral trade to the Latam region is heavily concentrated in Brazil, with more than 35% of Indian goods landing in the country in 2015-16. Peru was the third-largest destination for Indian goods in the region with exports of $703.12 million during 2015-16. An FTA with Peru was originally thought of as test case to leverage the markets of the latter’s preferential trade partners in the region, observed Sandip Samaddar, head, Americas, Federation of Indian Chamber of Commerce (FICCI). Peru has preferential trading arrangement with about 53 countries. Given the fact that nearly 95% of Peru’s exports are covered by FTAs, this seems to be viable strategy. In order to implement this strategy, Indian companies have to aggressively integrate with the regional value chains in the Latin American region. This requires resource commitment from companies and a well-laid-out plan that would bear fruit only in the long run.

Trade, not poverty, could become focus of £1.3bn UK aid pot, watchdog warns (The Guardian)

The UK’s aid watchdog has warned that a £1.3bn pot of UK aid money intended primarily to reduce global poverty could become focused on trade with wealthier economies such as China and Brazil. The Independent Commission for Aid Impact also cautioned that potential suppliers of services to the government’s prosperity fund had been providing advice – often at a UK embassy level – on the designs of programmes in “ways that are not sufficiently transparent”. Icai called on the fund to improve its levels of transparency overall, saying there was too little public information available about its work.

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